A credit score does have a significant impact on your financial profile. If it is under the category of excellent, good or even fair credit ratings, you have a strong opportunity to get the funding quickly.
In a poor or very poor credit history scenario, several restrictions come your way, or even loan rejections become your destiny. It becomes quite challenging when you approach the banks or other financial situations following the traditional approach.
People with bad credit history still have some chances of loan approval on their steady income. What about those with very poor credit history? Can they have an outside chance of borrowing money? Let us discuss the topic in this blog.
Why Very Bad Credit Score is the matter of concern?
Your borrowing chances are more accessible on your financial trustworthiness. And, lenders judge your financial credibility with your credit scores.
As mentioned above, your good credit score will open up more funding opportunities for both short-term and long-term funding goals. On the other hand, an adverse credit score almost closes all the loan doors for you.
You have a very poor credit score against your name because you have not been good in your credit card payments. You have not been paying loan repayments on time. Your financial providers did not have any option but to approach the court. Consequently, you get the County Court Judgement (CCJ) against your name.
Consequently, no lender will go to trust on your financial ability and reject to offer you another loan. Simultaneously, you may again trap in the financial emergency, and you need another loan.
Is there any loan available? You will be surprised to see an outside chance available. It may be very bad credit loans available with no guarantor and no broker in the UK. These loans can be available from direct lenders, as they seem more flexible in their lending norms.
What are Very Bad Credit Loans?
Many loan options are available in the UK marketplace. One of them is very bad credit loans, which are also known as poor credit loans or adverse credit loans.
These are short-term loans available to those with having CCJ or bankruptcy against their names. You can only get small funding, particularly needed during financial emergencies.
These are also high-risk loans for the lenders, as they are going to fund those individuals who have no financial credibility. Still, they are willing to offer loans as they charge high-interest rates for this.
What Are the Advantages of Adverse Credit loans?
Loans are meant for financial assistance in any situation. Very bad credit loans can be counted among them, as they have certain advantages for the borrowers. Some of them are mentioned below:-
- You get the approval despite a very poor credit history. Lenders who offer these loans are used to give approval on the applicants’ present financial commitments.
- You will have a nice chance of improving your credit record by making each loan instalment on time. However, you have to be careful about the repayments.
- You may not need any guarantor while submitting the loan application as the amount is generally smaller, which you can manage from your monthly income.
How are these very bad credit loans risky?
One more thing that you should also know is these are high-risk loans. You have to be very careful in your decision of loan applying. Otherwise, it may halt your funding options. The possible risks are:-
- You will have to pay higher interest rates for the loans because these are unsecured. There may be a chance of not being able to afford the rates from limited income.
- Missing even a single repayment can impact badly to your credit profile. You must be sure about loan repayments before opting for this outside source.
- You cannot look for long-term funding with these loans, as these are only small loans. The best use of them is during the financial emergency.
In the Nutshell
Thus, you can see that you have an outside chance to get the loan approval despite a very bad credit score. You need to grab this chance with extra care because it is the only way to come out of the tricky situation.